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Howard U. Employees Took Financial Aid Funds: School President

The president of Howard University said Wednesday that employees were found to have inappropriately taken financial aid funds. Six people were fired. News4's Meagan Fitzgerald spoke with outraged students and parents. (Published Wednesday, March 28, 2018)

Six Howard University employees were fired last year after an internal investigation found the financial aid office had misappropriated university-based grants to some university employees, the school's president said Wednesday.

According to a statement from Wayne Frederick, Howard University president, an outside auditor found that several university employees received grants in addition to discounts on tuition that exceeded the total cost of tuition and kept the difference.

Some students said they felt betrayed. Employees took financial aid funds as students prepare to spend years paying off their loans.

"I'm actually on the verge of transferring schools because I can't afford to stay here because a grant was taken away from me," one student said.

Frederick said he was told in December 2016 that there may have been "some misappropriation of university-provided financial aid funds," and launched an internal investigation.

The auditor found that between 2007 and 2016, university grants were awarded to some university employees who also were receiving tuition remission. The grants and tuition remission equaled more than the total cost of attendance, which allowed the employees to receive "inappropriate refunds."

The grants came from institutional funds that help low-income students pay tuition. Frederick said the grants came from the university and were not federal or donor funds.

Tuition remission allows eligible employees or their dependents to receive discounted tuition at the university. Full-time employees eligible to receive tuition remission can take two classes per semester for free, according to the university's website. Tuition at Howard for the 2017-2018 school year was $12,061 per semester, not including room and board.

Frederick's statement came after an anonymous post on Medium.com claimed financial aid employees at the university stole nearly $1 million in funds.

Frederick did not comment on how much had been received by those individuals.

Frederick said the issue was reported to the Department of Education in July 2017, and six employees were fired two months later for "gross misconduct and neglect of duties."

Criminal charges have not yet been filed.

The revelations follow a string of problems at the university. In March, Frederick drew criticism for his response to a student who begged him for help securing housing. He told her the "tone and tenor" of her email were inappropriate. In January, spring semester classes were delayed by more than a week because of campus-wide problems with the heating system. And last May, students filed a lawsuit saying the university failed to help students who were raped by fellow students and employees.

A man who worked in the financial aid office for years said he tried to report inappropriate activity.

"It was a culture of fear where you had a lot of people who were afraid of the powers that be in the office," he said. He asked News4 to withhold his name.

"When these things were brought to [officials'] attention, they were just handled in a way that made people afraid to speak up. And that whole culture is still present, and it starts from the top," he continued.

In accordance with my commitment to continuous progress, in February 2015, I initiated a proactive review of the Howard University Office of Financial Aid to ensure the office was providing the best support to our campus community.

As part of this process, I was alerted in December 2016 that there may have been some misappropriation of University-provided financial aid funds. From the moment I was alerted that there may have been a misappropriation of funds, I have taken this situation extremely seriously. I immediately informed the Board of Trustees, and together we moved swiftly to begin an internal investigation. The University immediately engaged an outside auditor (RSM) to determine whether there had been any misappropriation of Howard University funds by staff in the Office of Financial Aid or elsewhere, and if so, the magnitude of that misappropriation. The auditors completed their investigation and reported the results to me in May 2017.

The investigation found that from 2007 to 2016, University grants were given to some University employees who also received tuition remission. The audit revealed that the combination of University grants and tuition remission exceeded the total cost of attendance. As a result, some individuals received inappropriate refunds. Note that University grants are institutional funds used to help support students with student charges. They are not federal funds or donor directed funds.

In July 2017, I self-reported this issue to the Department of Education and assured them we would provide regular updates on the investigation.

An investigation of individual employee actions was completed in September 2017 and as a result, six employees have been fired for gross misconduct and neglect of duties. We will refer this matter for criminal prosecution, as appropriate.

Third Coast Higher Education, another outside expert, was also brought in specifically to determine if any misappropriation of federal funds occurred. At this point, Third Coast found no misappropriation of federal funds related to this issue.

The financial integrity of Howard University’s operations is paramount and strong measures have been taken following the RSM investigation to ensure this never happens again. As part of these reform efforts, significant new policies and procedures have been implemented to strengthen Howard’s internal controls with respect to the awarding of financial aid, including:

• Annual budgets for each category of financial aid are now loaded into the University’s Banner student information system by the University Budget Office consistent with the University’s overall Financial Aid Budget.

• Approval for all awards of University Grants are now reviewed and approved by the Budget Office prior to being awarded by the Financial Aid Office

• An annual reconciliation of awarded financial aid to approved financial aid is now being conducted.

• Management has established proper reporting relationships and segregation of duties within the Financial Aid Office.

• Management is in the process of hiring for all remaining open positions in the Financial Aid Office and enhanced training on policies and procedures will be provided both to new hires and continuing employees.

• A new Associate Provost for Enrollment Management and a new Chief Compliance Officer have been hired by the University.

While this has been a very difficult and disappointing situation, I know our campus community deserves better and I am committed to ensuring that each of our campus offices operate with integrity and are the best that higher education has to offer.